Company Reports

We are discontinuing analyst coverage of Zoom Communications.

Zoom Video Communications’ mission is "to make video communications frictionless," which it accomplishes with a unified, video-first communications platform that incorporates video, voice, chat, and content sharing. Zoom more recently introduced both a phone system and a contact center solution. The firm offers a differentiated peer-to-peer technology, complete with proprietary routing technology. Zoom is a recognized market leader in meeting software and is disrupting and expanding the $100 billion market for collaboration software with its ease of use and superior user experience. We think the pandemic lockdowns demonstrated the strength of the solutions, which, combined with an expanding portfolio and strong returns, help establish a narrow moat.

Zoom reported first-quarter results with both revenue and non-GAAP operating margin topping the high end of guidance. Revenue was $1.239 billion, while non-GAAP operating margin was 41.1%. The firm’s second-quarter outlook was also ahead of our expectations.

The pace of change in the software industry has accelerated in recent months, leading to heightened uncertainty and prompting us to reassess our moat ratings.

Zoom Video Communications’ mission is "to make video communications frictionless," which it accomplishes with a unified, video-first communications platform that incorporates video, voice, chat, and content sharing. Zoom more recently introduced both a phone system and a contact center solution. The firm offers a differentiated peer-to-peer technology, complete with proprietary routing technology. Zoom is a recognized market leader in meeting software and is disrupting and expanding the $100 billion market for collaboration software with its ease of use and superior user experience. We think the pandemic lockdowns demonstrated the strength of the solutions, which, combined with an expanding portfolio and strong returns, help establish a narrow moat.

Zoom reported fourth-quarter earnings with revenue exceeding the high end of guidance, reaching $1.247 billion, translating to a solid 5.3% year-over-year growth rate. However, non-GAAP EPS of $1.44 fell short of guidance. The firm also guided to a cautious profit outlook for 2027.

Zoom Video Communications’ mission is "to make video communications frictionless," which it accomplishes with a unified, video-first communications platform that incorporates video, voice, chat, and content sharing. Zoom more recently introduced both a phone system and a contact center solution. The firm offers a differentiated peer-to-peer technology, complete with proprietary routing technology. Zoom is a recognized market leader in meeting software and is disrupting and expanding the $100 billion market for collaboration software with its ease of use and superior user experience. We think the pandemic lockdowns demonstrated the strength of the solutions, which, combined with an expanding portfolio and strong returns, help establish a narrow moat.

Zoom Video Communications’ mission is "to make video communications frictionless," which it accomplishes with a unified, video-first communications platform that incorporates video, voice, chat, and content sharing. More recently, Zoom introduced a phone system and a contact center solution. The firm offers a differentiated peer-to-peer technology, complete with proprietary routing technology. Zoom is a recognized market leader in meeting software and is disrupting and expanding the $100 billion market for collaboration software with its ease of use and superior user experience. We think the pandemic lockdowns demonstrated the strength of the solutions, which combined with an expanding portfolio help establish a narrow moat.

Zoom's third-quarter results surpassed management guidance. Revenue grew 4% year over year to $1.230 billion, relative to the high end of guidance of $1.215 billion. Non-GAAP operating margin was 41.2% compared with guidance of 38.0%, due to cost discipline and timing.

Zoom reported second-quarter results that surpassed management guidance. Revenue grew 5% year over year to $1.217 billion, relative to the high end of guidance of $1.2 billion. Non-GAAP operating margin was 41.3% compared with guidance of 38.6% due to cost discipline and some one-time savings.

Zoom's first-quarter results topped the high end of management's guidance. Revenue increased 2.9% year over year to $1.175 billion, compared with the high end of guidance of $1.167 billion, while operating margin was 39.8%, compared with the high end of guidance at 38.1%.

We are maintaining our fair value estimate of $92 per share for narrow-moat Zoom after the company reported good fourth-quarter results that came in better than we anticipated on both the top and bottom lines, while full-year fiscal 2026 guidance was largely in line with our expectations. With recent positive trends continuing and guidance consistent with our model, we made only modest changes to our model based on the new outlook. Shares performed well over the last six months and after flirting with our fair value, have pulled back in the last month such that we once again see some upside.

Zoom Video Communications’ mission is "to make video communications frictionless," which it accomplishes with a unified, video-first communications platform that incorporates video, voice, chat, and content sharing. More recently, Zoom introduced a phone system and a contact center solution. The firm offers a differentiated peer-to-peer technology, complete with proprietary routing technology. Zoom is a recognized market leader in meeting software and is disrupting and expanding the $100 billion market for collaboration software with its ease of use and superior user experience. We think the pandemic lockdowns demonstrated the strength of the solutions, which combined with an expanding portfolio help establish a narrow moat.

We raise our fair value estimate to $92 per share from $89 for narrow-moat Zoom, after the company reported solid fiscal third-quarter results that were above our expectations on both the top and bottom lines, while guidance for the fourth quarter was slightly ahead of our estimates. We made only modest changes to our model based on guidance. After a strong run of more than 60% since early August, shares now look fairly valued. Now that investors have seen revenue start to accelerate, the question becomes the progression of that acceleration. We made no changes to our model beyond the next few quarters, so the acceleration looks modest to us. However, given double-digit growth in both deferred revenue and CRPO, steeper acceleration seems possible.

Zoom Video Communications’ mission is "to make video communications frictionless," which it accomplishes with a unified, video-first communications platform that incorporates video, voice, chat, and content sharing. More recently, Zoom introduced a phone system and a contact center solution. The company offers a differentiated peer-to-peer technology, complete with proprietary routing technology. Zoom is a recognized market leader in meeting software and is disrupting and expanding the $100 billion market for collaboration software with its ease of use and superior user experience. We think the pandemic lockdowns demonstrated the strength of the solutions, which combined with an expanding portfolio help establish a narrow moat.

Zoom hosted its Zoomtopia investor day, highlighting a resilient financial model and introducing many new product features and enhancements centered around artificial intelligence. While we view the new features as evolutionary rather than revolutionary, we are impressed with the company’s commitment to product innovation. The company also updated its long-term financial targets, demonstrating meaningfully higher profitability than management previously anticipated. Our long-term model was above management's prior framework, so this is no surprise to us, but it does pave the way for potentially higher margins than we currently contemplate. Critically, incoming CFO Michelle Chang approved these new financial targets. We also appreciate a much larger addressable market given the product introductions since the company’s investor day in 2022. Overall, we make no changes to our model and maintain our fair value estimate of $89 per share for narrow-moat Zoom.

We are maintaining our fair value estimate of $89 per share for narrow-moat Zoom after the company reported good fiscal second-quarter results that were above our expectations on both the top and bottom lines. At the same time, full-year guidance was raised but by more than upside in the quarter. Based on guidance, we made only modest changes to our model and continue to view the stock as undervalued. Stabilization trends continue, consistent with the last several quarters, with enterprise growth and margins being the most obvious areas of strength. We are aligned with management’s belief that revenues will accelerate in the third quarter. Lastly, Zoom announced that Kelly Steckelberg, CFO, will leave after the firm’s third-quarter results to pursue a startup opportunity.

Zoom Video Communications’ mission is "to make video communications frictionless," which it accomplishes with a unified, video-first communications platform that incorporates video, voice, chat, and content sharing. More recently, Zoom introduced a phone system and a contact center solution. The company offers a differentiated peer-to-peer technology, complete with proprietary routing technology. Zoom is a recognized market leader in meeting software and is disrupting and expanding the $100 billion market for collaboration software with its ease of use and superior user experience. We think the pandemic lockdowns demonstrated the strength of the solutions, which combined with an expanding portfolio help establish a narrow moat.

We are maintaining our fair value estimate of $89 per share for narrow-moat Zoom after the company reported good fiscal first-quarter results above our expectations on both the top and bottom lines. At the same time, full-year guidance was raised but by less than upside in the quarter. We made only modest changes to our model based on guidance, and we continue to view the stock as undervalued. Results show a continuation of trends from the last several quarters, with enterprise growth and margins the most obvious areas of strength. Management still believes the second quarter will be the trough for revenue growth and expects to see modest top-line acceleration in the year's second half. Finally, the company repurchased 2.4 million shares for an aggregate price of $150 million.

Zoom Video Communications’ mission is "to make video communications frictionless," which it accomplishes with a unified, video-first communications platform that incorporates video, voice, chat, and content sharing. More recently, Zoom introduced a phone system and a contact center solution. The company offers a differentiated peer-to-peer technology, complete with proprietary routing technology. Zoom is a recognized market leader in meeting software and is disrupting and expanding the $100 billion market for collaboration software with its ease of use and superior user experience. We think the pandemic lockdowns demonstrated the strength of the solutions, which combined with an expanding portfolio help establish a narrow moat.